78% Of Stimulus To Be Spent In First 2 Years
By Justin Gardner | Related entries in Barack, Democrats, Economy, Money, Republicans
So says the CBO’s official score of the plan.
Does that mean the plan will stimulate the economy? Well, it depends on how you look at it. Because while I agree that more money could be allocated for pure infrastructure projects, states are suffering BIG budget shortfalls and they need help immediately so they can carry out even the most basic services.
Why just today we hear that California’s comptroller has said that they won’t pay out tax refunds totaling $3.5 billion to residents because they simply don’t have enough cash. This is at a time when unemployment (not underemployment, which is a higher number) is at 9.5% in the state. They need money to make sure people remain on medicaid, cops and teachers stay on the job, etc. Otherwise that $3.5 billion will never get paid out, which is exactly the kind of stimulus folks need in their pockets right now. And this is happening EVERYWHERE.
So sure, we can go through and pick out parts of it we don’t like, and I hope whatever we think is wasteful gets axed. But Republicans are going to have to accept that 1 in every 3 dollars is being spent on tax cuts and it’s not going to become a 50/50 proposition.
So what type of spending do they think is appropriate besides tax cuts? Because tax cuts is all I’ve heard from them so far. Maybe I’m not listening closely enough, but the majority of them seem to view any spending whatsoever as somehow irresponsible.
Oh, and by the way, I heard some grousing recently about tax cuts for Hollywood in the bill. Well, I think it’s really easy to beat up on the folks who make movies and call them elite, but do know that entertainment is one of the most profitable exports we create in this country and it’s one of the reasons that California is a global economic power house. But as I’ve mentioned above, even they’re feeling the pinch.
More as it develops…
This entry was posted on Monday, February 2nd, 2009 and is filed under Barack, Democrats, Economy, Money, Republicans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
February 2nd, 2009 at 9:57 pm
Other than give out more tax cuts…and does it really make sense to ask for tax cuts and also say we need a balanced budget?…the only thing I have heard from the Repubs is they don’t want to spend money on anything to do with family planning….
February 3rd, 2009 at 4:57 am
I agree that states need the help very quickly and I wish the tax cuts were a bit less and infrastructure spending greater. Tax cuts as stimulus is a great political idea, but doesn’t work as a long term strategy. They do have some stimulative effect, but since it is hard to raise them after the crisis is over, it has the impact of longer term deficit spending.
February 3rd, 2009 at 11:37 am
Logical tax cuts make short term sense, and the most logical I’ve heard are the taxes going to those who don’t pay income tax (which makes for a great target of GOP rhetoric but ensures that money will be spent), a one-year moratorium on capital gains of home sales, and tax code reform for corporate taxes, which has additional long-term benefits in terms of sustaining growth.
February 3rd, 2009 at 2:25 pm
Everyone knows that the states are all experiencing budget shortfalls. But the feds giving the states money to make up these shortfalls is not likely to stimulate the economy.
I don/t come from a partisan perspective, so I am especially perturbed to see arguments of the form “the republicans are wrong about x, therefore the current plan is sound.”
What the government sb doing is intervening more directly to stabilize the RE market by forcing or doing the brokering of new term on all those iffy loans based on long-gone valuations. Terms sb renegotiated for folks with the income to make some type of loan sustainable, and folks with insufficient income should be steered to bankruptcy to allow them to get out from under. Waiting for banks to do this semi-voluntarily won’t work.
Then the rest of the dough should go only for things for which a good argument can be made that they’ll have a demonstrative stimulative effect beyond replacing money that that disappeared from projections, like with state budgets,
The feds shouldn’t be jumping in to help state budgets until every state has made one FY round of serious and difficult budget cuts. And if the states want to undertake their own deficit spending, let them do so. Don’t make the feds borrow money to give to the states. That’s just stupid.
February 3rd, 2009 at 2:37 pm
Critics of the bill as it now stands (who include Democrats like me) would make these points, in particualr:
1) That 22% to be spent in the out years is hardly chump change. $142 billion would not be spent until after Sept. 30, 2010, more than 19 months from now. Calling that “fiscal stimulus” is transparent nonsense.
2) While it’s true that tax cuts generally don’t produce the same bang (lower multiplier effect) for the buck as many kinds of direct spending, tax cuts can be literally immediate — i.e., next week, people could see more take home pay — and can be modified, extended or rescinded as circumstances change. By and large, tax cuts to the less wealthy produce the most stimulus, but some types of targeted tax incentives to businesses can be helpful too.
3) The whole business about the pressing need to bale out states and munipalities is, in my judgment, vastly overblown. First, not all states and localities are in the mess that California is, and a big chunk of the bale out would effectively reward California for its profilgacy. Second, it’s not so vital to head off layoffs of public employees. As millions of private sector emplyoyees are losing their jobs — everywhere, in retail, manufacturing, technology, financial services, etc. — BLS data shows that government employment has held steady and is even growing in some categories! If you’ve ever worked in government (and I have in both big city and state agencies), you know that in many public functions, you could fire every fourth person and the remainig three would still never face a workload typical for any private company.
4) Finally, a lot of the proposed expenditures have simply not been examined closely and no one knows whether they make sense, even if the money could be spent in a timely way. See today’s New York Times for the story of the $9 billion proposed for broadband in “underserved” areas. It seems that no one can say whether the end users of this huge public investment are even there! So would it not make more sense to knock $9 billion off our payroll taxes next week?
There is a really compelling case for a great many changes. If they were made and the Republicans still didn’t support it, thenyou’d have them over a barrel. Now, frankly, they have the better argument.
February 3rd, 2009 at 7:34 pm
John,
The tax cuts for lower income people are nice and will help some people. As stimulus for our economy they suck because the actual cash is just enough to stretch the grocery budget and maybe allow for some cheap stuff to be bought at WalMart, our favorite pipeline to China. Remember, WalMart hates buying American products and pressures their suppliers to cut prices so much that they have no choice but to go overseas. They have even explicitly told vendors in meetings to move their production overseas.
Yeah, the states shouldn’t get any help now. Right. Tell that to the people in Missouri who will lose their unemployment benefits if the state can’t get some federal help right away. The entire argument against helping states and cities is highly questionable. First, I find your argument that booting more people out of work is a good thing somewhat questionable. Actually, I find the entire argument much more like what I’d expect to see over at RedState or LGF, protestations of being a Democrat to the contrary. For one thing what does job loss in the private sector have to do with jobs in government?? In fact in many agencies more people are needed to help deal with the unemployed and working poor. The logic content of the entire rant in that paragraph is zero.
Then there’s this one: “See today’s New York Times for the story of the $9 billion proposed for broadband in “underserved†areas. It seems that no one can say whether the end users of this huge public investment are even there!”. Since the company I do IT for has locations in small towns I can tell you that the end users do exist. There is in fact no doubt about that on the part of anyone who has a clue about what it’s like there and even in some suburbs if you happen to be in just the wrong place in relation to a phone company CO and no cable service nearby either. Heck, our main office in a suburb of KC still can’t get DSL and had to wait for a couple of years to get cable and could only get that by cutting a deal to run some extra cable on condition of length of service contract and services purchased. Anyone familiar with the issue knows that our country with its pathetic patchwork system is behind many other countries in how “wired” we are and are falling further behind.
The Republicans don’t have the better argument mostly because their entire argument seems to be that if they can’t make the entire stimulus be nothing but tax cuts at least we should minimize the whole thing. This, of course, is exactly what should be done if we want it to fail miserably. Gee, what a coincidence after Rush’s wish for Obama.